A recent report shared that 173 million Americans own smart phones, and CNN reported that mobile apps overtook desktop usage for the first time ever in February 2014. While mobile adoption rates continue to grow amongst consumers, a recent study by Capgemini found that financial institutions are relatively slow to adopt mobile banking capabilities – much to the chagrin of their customer base. So what can banks do to increase customer satisfaction and expand on their mobile offerings?
Current Trends in Mobile Banking and Social Media
To better understand the future of mobile banking, let’s take a look at what’s currently being offered. Many big-name banks, like Chase, Wells Fargo, and Bank of America, allow you to check your account balance, transfer funds from one account to another (including sending money to friends and family) and deposit checks right from your phone. Some mobile apps offer the ability for customers to opt in to push notifications, so they can be alerted if an account balance is running low or a payment is coming up..
Banks are starting to spend more time and attention on social media as a means for communicating with current and potential customers as well. Financial governing bodies, such as the FFIEC, FINRA, and the SEC all recommend an active and watchful social media presence for member institutions and individuals. Social media is an incredible vehicle for staying in touch with your audience members – whether it’s telling them about the bank’s products, providing customer service, or directing them to articles and apps to better meet their mobile banking needs.
But a recent study by Capgemini found that customer satisfaction is on the decline for financial services, and will continue to dwindle if banks don’t take heed and work to expand their mobile capabilities and social media integration.
According to The Financial Brand, Capgemini reported that “[Generation] Y (those born between X and Y) customers want to conduct more of their banking through social media channels and are frustrated that most banks only allow them to do basic research via these channels.”
Customers, especially those in Generation Y , want more. They want to be able to take advantage of all that a bank can offer them via their smart phones.
The study went on to report that “social media has not yet matured into a channel for executing transactions … yet. … at least 10% of customers in some regions of the world are using social media to interact with their banks at least once a week. … and retention is likely to increase at banks that offer a strong social media experience.”
As a technology friendly generation, Gen Y is currently driving these future experiences. We can only presume that Generation Z – those born between 1994 and 2010, and who have been brought up with social media -- will expect even more access, immediacy, and security from their bank’s mobile offerings.
Understanding the Audience
The Capgemini study shows an overall decline in customer satisfaction with the banking industry, a dip for the first time in 3 years. The study reflects that Gen Y-ers reported 21% more dissatisfaction compared to that of the older generations. So why is Generation Y disappointed with the state of banking? They want more from the technological standpoint: more mobile banking, more social customer service, more digital-friendly offerings.
Gremln’s CEO, Ryan Bell, chimed in on this topic by saying “I remember when I changed to my current financial institution. I would say 75% of my decision was based on the technology that my new bank provided via online and mobile banking. My old bank was great, but the convenience of my new bank’s mobile app and social interaction won me over.”
The Capgemini study shows that banks are struggling to meet the expectations of a multi-generational audience. We can understand why -- the baby boomer generation (those born between 1946-1964, and currently the most affluent and widespread demographic) are far less inclined to use social media and mobile devices for their banking needs. But banks cannot ignore the current and future needs of Gen Y and Z who expect immediate, digital, social experiences, for their financial power only stands to increase. Banks must walk a fine line between allocating their resources to provide the personal attention and security expected by older customers and advancing the mobile offerings expected by the younger generations.
While younger generations are eagerly pushing for more mobile banking services, older generations are somewhat wary of using their phones and tablets for any financially-related activities due to potential security risks. Their fears are not completely unfounded; it’s important to relay the proactive security measures banks are taking to keep all mobile banking as secure as possible.
Banks, too, are cautious of the potential security implications. The hesitation to provide much more in the way of accessing account information via mobile directly relates to the incredible amount of security safeguards that must be in place. Accessing more and more account-related services via mobile is on the highest priority list for customers, and is simultaneously the most difficult security concern banks face with mobile banking.
Current and Future Trends
As we move toward more and more ecommerce being possible without ever leaving a social network, the demand for taking care of all sorts of personal business on the same network increases. Many people use social media to see which products and services are recommended by their friends and family members. Being able to follow this recommendation to an actual sale, or account creation, would likely have a positive impact on the overall sales funnel for many businesses, financial institutions included. Not only that - the ease of information being catalogued and integrated into your overall banking profile means that your bank can learn more and more about you without you having to create multiple profiles. This helps the bank learn how to make recommendations based on your activities and needs, and aid you in making well-informed future decisions.
International banks are a bit ahead of the curve when it comes to advances in social banking. The Financial Brand collected a few examples of banks making use of social and mobile banking:
DenizBank in Turkey: The first to open a Facebook branch, allowing customers to access accounts, transfer money to friends, and apply for credit.
- Commonwealth Bank of Australia: Extended the “Kaching” product app to Facebook, enabling payments to friends, access to account information and transferring money between accounts.
- Royal Bank of Canada: Became the first North American institution to support P2P payments between Facebook friends.
- ICICI Bank in India: Created an app that lets users pay friends and track group expenses via Facebook. ICICI Bank also supports uploading funds to prepaid accounts and purchasing movie tickets online.
- ASB Bank of New Zealand: Created a virtual branch that provides services similar to a physical branch. Users can click on photos of staff members for one-on-one conversations and customer service.
- Moven: Integrates customer’s financial histories with social timelines to provide insight on how social activities impact spending habits, building on other Moven strategies that empower customers with insight and advice based on non-traditional sources of information.
What’s Next in Mobile Banking
So what’s next in mobile banking? It’s hard to say. Banks certainly need to shift their model from meeting the status quo of mobile banking and social media interaction to focusing on the future need and expectations of its clients. While the Generation Y and Generation Z demographics may not be the highest-spending customers now, they’re the ones who will be the power players of the future. And if banks aren’t developing the products and technology to meet them where they want to be, trust in the financial sector will continue to decrease.
Banks can improve the current audience temperature by spending more time engaging with their customers via social media. Find out what your customers want, and show them you are interested in hearing what they have to say. The more you can show your customers you are listening and working to improve your offerings, the higher likelihood of customer retention. If you haven’t started in social media yet, now is the time. If you are already in, kudos on your initiative, but be sure to stay active and use the right tools [Hint: Gremln can help].